Changes to the superannuation rules will come into effect on 1 July 2017. Hopefully you have already received comprehensive financial advice to ensure you are ready for the many changes from July 1, including the significant $1.6 million cap on tax-free superannuation.
Here’s some final steps you can take, where appropriate to your individual circumstances, before 30 June to take advantage of the current limits on super contributions.
Contribute more in before-tax (concessional) super contributions:
- The before-tax super contributions cap will be reduced from $30,000 per year (or $35,000 if you’re turning 50 or over before 1 July 2017) to $25,000 per year, for everyone, irrespective of age.
- This means, depending on your circumstances, there is an opportunity to contribute an additional $5,000 (or $10,000 if you’re turning 50 or over) in before-tax super contributions than what will be possible before the cap is lowered on 1 July 2017.
- You can make a before-tax contribution via salary sacrifice by contacting your employer, human resources or payroll department.
Contribute more in after-tax (non-concessional) super contributions:
- The after-tax super contributions cap will decrease from $180,000 per year to $100,000 per year. This means, depending on your circumstances, you could contribute $80,000 more in after-tax super contributions than what will be possible when the after-tax super contributions cap is reduced on 1 July 2017.
- If you’re under age 65, you could also bring forward three years’ worth of after-tax contributions up to a maximum of $540,000, which is much higher than the $300,000 limit that will also apply from 1 July 2017.
- From 1 July 2017, individuals with a total super balance of $1.6 million, or above, will not be able to make any further after-tax contributions. This means the current financial year may be the last opportunity where you can make an after-tax contribution to your super.
If you need any advice in relation to these changes please contact us on (02) 9908 9888 for more information or to discuss your situation specifically.
Kate is an Authorised Representative of Hillross Financial Services Limited (AR Number 1007833).